The cabinet has referred its amendments to the public budget to the president, according Finance Minister Ahmed Galal, with changes reflecting a broadening of public investment.
The government earmarked a financial package to stimulate the economy, which after these amendments would total EGP 665.29bn, to pay dues owed to contractors and suppliers, improve railroad crossings, support faltering factories, fund the restructuring of public sector companies, social housing, strengthening canals and bridges, and a national project for drinking water and sewage.
The minister emphasised that the financial package would not increase the state’s targeted budget deficit of 10% due to the success of reforms adopted recently by the government and the effect of the Arab aid package on interest rates and treasury bonds, which were nearly 4% lower.
Galal said the ministry had completed the necessary arrangements to implement the minimum income increase to EGP 1,200 for employees within the state bureaucracy next January, adding that it would cost the public treasury around EGP 9bn for the second half of the current fiscal year and increase to EGP 18bn annually.
Regarding the maximum income, the minister confirmed that the government has already taken several steps on the issue, including a confirmation of commitment from all governmental bodies for a maximum income law, which has been specified at 35 times the minimum income. This is in addition to the establishment of a comprehensive database for all salaries of employees in the government and bureaucracy, which Galal said would be an effective instrument for monitoring the execution of any decision that the state take regarding a maximum income ceiling.
The minister also revealed a number of bills to amend specifications for the new property tax code that will be presented soon to the economic group of the cabinet and then proceed to the president for ratification. The most important of these amendments changes for tax exemptions pertaining to residential properties whose value in less than a EGP 500,000, regardless of ownership of multiple properties. This may exempt more than 95% of residential properties in Egypt.
Included in the amendments as well is an exemption for properties engaged in non-residential activities up to an estimated rental value of EGP 1,200, or market value of EGP 100,000.
Regarding the value of expected revenue, the minister said that estimates indicate between EGP 5.2bn to EGP3bn in the beginning.
The government’s keenness to achieve financial discipline despite expanding its spending, Galal said, rests on its desire to spare low-income groups from the effects of an uncontrollable deficit, most importantly, from inflation (rising prices). He said that the current government refuses to mix business with politics, but is adamant at the same time to widen consultations with all parts of society. The minister also affirmed that serious policies to stimulate growth, achieve justice, and open the door for foreign and domestic investment, and not aid, would help support Egypt.